Assembled in South Beach this past weekend were some of the most innovative 21st century entrepreneurs and vapor enthusiasts in the nation. The World Vapor Expo and Electronic Cigarette Show brought together businesses from around the country to sell their products to brick-and-mortar vape shops and Florida consumers. I attended as an exhibitor on behalf of Americans for Tax Reform.
I didn’t have the newest “mod,” wasn’t announcing our new “chocolate chip ice cream” liquid nicotine, or handing out free samples of our top selling “juices.” I was there to do more than enjoy the Art Deco architecture and semi-nude beaches and pools. I was there to warn these mom-and-pop business owners about looming state and federal regulations that stand to put them out of business.
Originally developed in China, e-cigarettes are becoming an extremely popular product among traditional tobacco consumers trying to quit smoking. A recent study even found that smokers are 60 percent more likely to successfully quit when using e-cigarettes compared to nicotine patches or willpower. Cigarette smoking represents a significant risk to one’s health. E-cigarettes, on the other hand, which do not contain tobacco and don’t produce smoke, are much less harmful. Unfortunately, the relative “newness” of these products has left bureaucrats at the Food and Drug Administration aghast about how to regulate the products. This was one of the most popular items of discussion with many of the attendees who stopped by our booth at the Miami Convention Center.
Having “vaped” a few times in my life, I thought I knew what I was getting into this weekend. In many ways, I was wrong. There are literally thousands of different flavors and “juices” for your vapor device. Nearly every exhibitor was letting attendees try theirs out for free. Bubble gum and milk and honey were among my favorites. Those who passed by ATR’s booth were either disappointed that we had no products to offer, or confused about our presence. Fortunately I brought beer koozies and relevant canvas bags that said, “The contents of this bag are overtaxed and overregulated.” It made for very interesting conversations. “Why are you here?” “Who are you?” and “Do you vape?” were among the most common questions I was asked. The FDA, Americans for Tax Reform, and every once in a while, were my respective replies.
Earlier this year the FDA announced that they would be considering a new set of regulations for the e-cigarette and vapor industry over the next year or so. Among the list of possibilities includes requiring standardization of the products, a disclosure of ingredients, and mandated childproofing. It may also require proof that new products present a public health benefit before being approved. At a minimum, the FDA could codify the definition of these products similar to that of Other Tobacco Products, or OTP’s as their known in many state tax classification laws. This last regulation presents the biggest danger. These products are not OTP’s; in fact many of the juices contain no nicotine whatsoever. It should be common sense that similar to the nicotine patch, these smoking cessation devices are not remotely similar to snuff, pipe tobacco, roll your own cigarettes, etc. Unfortunately for the FDA, when they tried to ban them as “drug-device combination products” in 2009, a federal court shot them down.
If the FDA codifies this definition, states are likely to follow suit. This means lumping the products into the taxable category of products subjected to extremely high sin taxes. Currently, only two states have a special higher than sales tax classification for the products: Minnesota and North Carolina. But countless states this year alone considered defining e-cigarettes and vapor products as OTP’s subjecting them to taxes as high as 95 percent of wholesale cost. This would cripple small businesses struggling to introduce new products to the market, which is already wary of anything resembling or related to tobacco. Ironically, the e-cigarette community is extremely vocal about the harmful impact of smoking.
The vaping community is bipartisan. Attendees at the World Vapor Expo volunteered that they were libertarians, anarchists, Democrats, conservatives, and apolitical. But they all agreed on one thing: products that save lives shouldn’t be lumped into a category of overtaxed products that more than 40 million people use to the great detriment of their health.
These new entrepreneurs and vapor enthusiasts aren’t sitting idly by as the looming threat of federal regulations and state taxes stand to ruin their industry. They’re organizing protests at state capitals, testifying at legislative committee hearings, collecting consumer email lists, and joining the center-right Leave Us Alone movement. As the market of products and consumers grow, so too will this limited government minded voting bloc, something that should scare Republicans and Democrats alike who want to regulate and tax them out of existence.
Paul Blair is the state affairs manager at Americans for Tax Reform. You can follow him on Twitter @gopaulblair or reach him by email at pblair@atr.org.